Freddie offloads $270 million in risk

by Ryan Smith25 Apr 2014
Freddie Mac has obtained insurance policies that will cover almost $270 million in losses on a pool of single-family mortgages.

The policies, underwritten by a group of private insurers and reinsurers, were obtained under Freddie’s Agency Credit Insurance Structure (ACIS), which is designed to attract private capital from non-mortgage guaranty insurers and reinsurers in order to reduce taxpayer exposure to mortgage losses.

“We have a good start on our goal to provide multiple avenues for sharing mortgage credit risk with a diverse spectrum of private investors,” said Kevin Palmer, vice president of single-family strategic credit costing and structuring for Freddie Mac. “Global reinsurers represent a large source of capital, and they are interested in expanding their product line to cover single-family mortgages. This year, we expect to execute multiple insurance transactions and bring in additional insurance and reinsurance companies.”

This is the second ACIS risk-sharing initiative Freddie Mac has conducted. The first, completed in November, covered up to $77.4 million in credit losses. The ACIS initiatives, along with four debt note offerings, have allowed Freddie to lay off loss risk on more than $95 billion in single-family mortgages.
 

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